Nasdaq leads drop as hawkish Fed bets rise

Already on the ascendency, bond yields and the dollar both gained further ground which sent stocks plunging along with gold, copper and Bitcoin. The Nasdaq 100 was down more than 2% at one point earlier, before bouncing off its worst levels at the time of writing.

Ironically, sentiment has taken a hit thanks to the release of strong US economic data. The unexpected rise in the Fed’s favourite measure of inflation (Core PCE Price Index) we saw earlier in the day was matched by stronger personal spending and new home sales data, while the UoM’s consumer sentiment survey was revised higher.

Today’s data releases have been in line with the recent trend, all helping to fuel speculation that the Fed's terminal interest rate could be higher than expected.
Against this backdrop, investors are not keen to hold onto assets that pay low, or no interest or dividend compared to government debt.

The Nasdaq might stage a bit of a recovery from around its 200-day average, but it now faces lots of overhead resistance. The 12000 level is now the most important barrier that the bulls will want to reclaim and the bears defend. Previously support, it could turn into resistance moving forward.


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